Channel 4 risks a shift towards a more commercial, ratings-driven
programme schedule if the funding formula is abolished, the ITV
companies warned this week.
ITV set out its stall of arguments against scrapping the funding formula
- by which Channel 4 has so far paid ITV pounds 95 million - in a new
report on the background and significance of the payment mechanism.
The funding formula was introduced to protect the revenue base of both
stations when Channel 4 began to sell its own advertising airtime in
1992. It was deemed that Channel 4 would need 14 per cent of TV
advertising in order to meet the remit of its broadcasting licence. If
its revenue goes above 14 per cent, then a portion has to be paid back
But Channel 4 has consistently taken significantly more than 14 per
cent, and has been campaigning for the funding formula to be abolished.
It claims that if it were allowed to keep the money it would be able to
boost UK production and enable further investment in quality programming
to take place.
Leslie Hill, ITV’s chairman, questioned the assertions and claimed that
Channel 4’s campaign to scrap the funding formula ‘greatly
oversimplifies the real issues involved’.
The report states that Channel 4’s success in selling its own airtime
has meant that it has been able to increase its programming budgets by
44 per cent - more than any other broadcaster. If the formula were
scrapped, ITV said, Channel 4 would become more commercially led.
ITV is keen to set out its arguments in advance of the Government’s 1997
review of the formula.